Referrals among friends pay off for Folica.com

Folica Inc., an online retailer of hair care and hair styling tools, knew from reading the product reviews on its e-commerce site that new customers often bought from the site because friends told them about it. Wanting to reward and accelerate such word-of-mouth recommendations, last year Folica began offering customers who referred others a $10 credit toward future purchases at Folica.com when a referral resulted in a purchase. The referred customer also received a $10 credit as an incentive to make her first purchase from the e-retailer.

To create the program, Folica worked with Extole Inc., a vendor that manages word-of-mouth referral programs on web sites and social media. To launch the program, Folica explained the refer-a-friend program in an e-mail sent to its 850,000 e-mail subscribers. It also announced the news on Facebook and added a “send to a friend” link to the top of every product page on Folica.com.

Extole’s technology makes it possible for Folica.com customers to share their endorsements via their preferred electronic communication tools. Customers enter e-mail addresses, post the referral offer to their Facebook walls or send it through Twitter. Friends then click a referral link to visit, and buy, from Folica. The landing page provides each referred customer a unique promotional code that entitles the customer to a $10 credit when entered at checkout. Once the code is used, the friend who recruited the new customer receives a coupon code via e-mail.

Metrics gathered after the first 30 days of the promotion exceeded Folica’s early expectations, Bohm says. 93% of the referral e-mails customers sent to friends were opened, and 22% of those who opened a referral e-mail clicked through to visit Folica.com. 16% went on to make a purchase, according to Extole’s program statistics. The average online conversion rate for e-commerce is 2.9%, according to Forrester Research and Shop.org statistics released last year.

The refer-a-friend program continues today and Folica promotes it in its regular e-newsletters to customers and on Facebook. Bohm says Folica plans to test an offline referral program to reach an even broader audience.